Fundamentals of Planning

SEKOLAH TINNGI ILMU EKONOMI

MUHAMMADIYAH BANDUNG

By :

Tsabitul Azmi

31710089

Management Weekend
PREFACE

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A. Why and How Managers Plan

In chapter 1 the management process was described as planning, organizing, leading, and
controling the use of resources to achieve performance objectives. The first of these funtions,
planning, set the stage for the other by providing a sense of direction. It is a process of setting
objectives and determining how best to accomplish them. Said a bit differently, planning
involves deciding exactly what you want to accomplish and how best to go about it.

- Importance of Planning
when planning is done well it creates a solid platform for thr other management functions:
organizing-allocating and arranging resources to accomplish tasks: leading-guiding the effortd of
human resources to ensure high levels of task accomplishment and controling-monitoring task
accomplishments and taking necessary corrective action.

Is essential to stay one step ahead of the competition. This involves always striing to become
better at what you are doing and to be action-oriented. An Eaton Cor[oration annual report, for
example, once stated : "Planning at Eaton means making the hard decisions before events force
them upon you, and anticipating the future needs of the market before the demand assert it self

B. What Types of Plans do Managers use

I. Strategic Plan
strategic plan is a high-level overview of the entire business, its vision, objectives, and value.
This plan is the foundational basis of the organization and will dictate decisions in the long-term.
The scope of the plan can be two, three, five, or even ten years.

Managers at every level will turn to the strategic plan to guide their decisions. It will also
influence the culture within an organization and how it interacts with customers and the media.
Thus, the strategic plan must be forward looking, robust but flexible, with a keen focus on
accommodating future growth.

The crucial components of a strategic plan are:

1. Vision

Where does the organization want to be five years from now? How does it want to influence the
world?

These are some of the questions you must ask when you delineate your organization’s vision. It’s
okay if this vision is grandiose and idealistic. If there is any room to wax poetic within a plan, it
is here. Holding ambitions to “make a dent in the Universe” (Apple/Steve Jobs) is acceptable, as
is a more realistic vision to create the most “customer-centric company on Earth” (Amazon).

2. Mission

The mission statement is a more realistic overview of the company’s aim and ambitions. Why
does the company exist? What does it aim to achieve through its existence? A clothing company
might want to “bring high street fashion to the masses”, while a non-profit might want to
“eradicate polio”.

3. Values

“Inspire. Go above & beyond. Innovate. Exude passion. Stay humble. Make it fun”

These aren’t fragments from a motivational speech, but Fab.com’s values. Like Fab, each
organization has its own values. These values will guide managers and influence the kind of
employees you hire. There is no template to follow when jotting down the values. You can write
a 1,000 page essay, or something as simple as Google’s “Don’t be Evil” – it’s all up to you.

As you can see, there are really no rules to writing the perfect strategic plan. This is an open-
ended, living document that grows with the organization. You can write whatever you want in it,
as long as it dictates the future of your organization.

For inspiration, just search for the value/mission/vision statement of your favorite companies on
Google. Or, consider taking this course on business planning for average people.

II. Tactical Plan

The tactical plan describes the tactics the organization plans to use to achieve the ambitions
outlined in the strategic plan. It is a short range (i.e. with a scope of less than one year), low-level
document that breaks down the broader mission statements into smaller, actionable chunks. If the
strategic plan is a response to “What?”, the tactical plan responds to “How?”.

Creating tactical plans is usually handled by mid-level managers.

The tactical plan is a very flexible document; it can hold anything and everything required to
achieve the organization’s goals. That said, there are some components shared by most tactical
plans:

1. Specific Goals with Fixed Deadlines

Suppose your organization’s aim is to become the largest shoe retailer in the city. The tactical
plan will break down this broad ambition into smaller, actionable goals. The goal(s) should be
highly specific and have fixed deadlines to spur action – expand to two stores within three
months, grow at 25% per quarter, or increase revenues to $1mn within six months, and so on.

2. Budgets

The tactical plan should list budgetary requirements to achieve the aims specified in the strategic
plan. This should include the budget for hiring personnel, marketing, sourcing, manufacturing,
and running the day-to-day operations of the company. Listing the revenue outflow/inflow is also
a recommended practice.

3. Resources

The tactical plan should list all the resources you can muster to achieve the organization’s aims.
This should include human resources, IP, cash resources, etc. Again, being highly specific is
encouraged.

4. Marketing, Funding, etc.

Finally, the tactical plan should list the organization’s immediate marketing, sourcing, funding,
manufacturing, retailing, and PR strategy. Their scope should be aligned with the goals outlined
above.

If you’re struggling to create a strong tactical plan, this course on drafting great business
plans will point you in the right direction.

II. Operational Plan

The operational plan describes the day to day running of the company. The operational plan
charts out a roadmap to achieve the tactical goals within a realistic timeframe. This plan is highly
specific with an emphasis on short-term objectives. “Increase sales to 150 units/day”, or “hire 50
new employees” are both examples of operational plan objectives.

Creating the operational plan is the responsibility of low-level managers and supervisors.
Operational plans can be either single use, or ongoing, as described below:

1. Single Use Plans

These plans are created for events/activities with a single occurrence. This can be a one-time
sales program, a marketing campaign, a recruitment drive, etc. Single use plans tend to be highly
specific.

2. Ongoing Plans

These plans can be used in multiple settings on an ongoing basis. Ongoing plans can be of
different types, such as:

 Policy: A policy is a general document that dictates how managers should approach a
problem. It influences decision making at the micro level. Specific plans on hiring
employees, terminating contractors, etc. are examples of policies.
 Rule: Rules are specific regulations according to which an organization functions. The
rules are meant to be hard coded and should be enforced stringently. “No smoking within
premises”, or “Employees must report by 9 a.m.”, are two examples of rules.
 Procedure: A procedure describes a step-by-step process to accomplish a particular
objective. For example: most organizations have detailed guidelines on hiring and
training employees, or sourcing raw materials. These guidelines can be called procedures.

Ongoing plans are created on an ad-hoc basis but can be repeated and changed as required.

Operational plans align the company’s strategic plan with the actual day to day running of the
company. This is where the macro meets the micro. Running a successful company requires
paying an equal attention to now just the broad objectives, but also how the objectives are being
met on an everyday basis, hence the need for such intricate planning.

4. HOW Can Plans Be Well Implemented

Great goals are specific, timely, measurable, referred to, and attainable.  A hierarchy of objectives helps
to align goals from top to bottom in orgs.  MBO is a participative process for clarifying performance
objectives for an individual and identifying helpful support that can be provided by the manager. 
Participation and involvement open the planning process to valuable inputs from people whose efforts are
essential to the effective implementation of plans.
1. What is the role of information in the management process?

A. Competency in using tech to access, process, and share info is an essential career skill.

B. Data are raw facts and figures; info is data made useful for decision-making

C. Info useful in mgmt is timely, high quality, complete, relevant, and understandable.

D. Mgmt info systems collect, organize, store, and distribute data to meet the info

needs of managers.

E. Managers play important roles in helping orgs meet their external and internal info needs.

F. IT is breaking barriers within and between orgs to speed workflows and cut costs.

2. How do managers use info to make decisions?

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A. Managers serve as info nerve centers in the process of planning, organizing, leading, and controlling
activities in orgs.

B. Managers can display problem avoidance, problem solving, and problem seeking in facing problems.

C. Managers vary in their use of systematic and intuitive thinking, and in tendencies toward
multidimensional thinking.

D. Managers must understand the different cognitive styles people use in decision-making.

E. Programmed decisions are routine solutions to recurring and structured problems; nonprogrammed
decisions are unique solutions to novel and unstructured problems.

F. Crisis problems occur unexpectedly and can lead to disaster if not handled quickly and properly.

G. Managers face problems and make decisions under conditions of certainty, risk, and uncertainty.

3. What are the steps in the decision-making process?

A. The steps in the decision making process are:

- Find and define the problem

- Generate and evaluate alternatives

- Decide on the preferred course of action

- Implement the decision

- Evaluate the results

B. An optimizing decision, following the classical model, chooses the absolute best solution from a
known set of alternatives.

C. A satisficing decision, following the behavioural model, chooses the first satisfactory alternative to
come to attention.

4. What are current issues in managerial decision-making?

A. Common decision errors and traps include the availability representation, and anchoring and
adjustment biases, as well as framing error, confirmation error, and escalating commitment.

B. The personal creativity drivers of individual creativity skills, task expertise, and motivation can
enhance creativity in decision-making.

C. The situational creativity drivers of group creativity skills, mgmt support, and org culture can enhance
creativity in decision-making.

D. Group decisions offer the potential advantages of greater info and expanded commitment, but they are
often slower than individual decisions.

E. Use of recommended spotlight questions as an ethics double-check is a good way for managers to
ensure ethical decision-making.